TSPB ANNUAL REPORT 2017

Distinguished Members, As the fragile process lived on across the world in 2017, Turkey was able to come through the repercussions of the extraordinary events of the previous year. The Turkish economy closed 2017 with a solid growth rate of 7.4%. 2017 has been a very prolific year also for our capital markets. The market capitalization of our stock exchange went up by 42% in 2017 and reached TL 873 billion. Average daily trading volume grew by 44% on the equity market to TL 5.8 billion and by 33% on the futures market to TL 3.7 billion. Total assets under management by asset management companies, including pension funds, arrived at TL 158 billion by the end of the year. This performance reflected on the income of our members, as well. According to interim results, earnings of intermediary institutions surged by 65% year-over-year and reached TL 800 million in 2017, whereas asset management companies attained a strong expansion of 50%, bringing their earnings up to TL 165 million. In 2017, our capital markets saw some of the most important developments in relation to increasing savings. First, upon introduction of automatic enrolment in private pension, nearly 3.5 million people began investing their savings in pension funds. Total number of private pension participants closed in on 10.5 million people. The rate of increase will persist also in 2018 and management of pension funds will be a key topic that will be on the agenda next year. An up-and-coming area this year on the asset management side has been the flourishing of real estate and venture capital investments in the form of mutual funds. Such funds will keep expanding in 2018. Another event with imminent positive reflection on our sector has been the generation of funds for the manufacturing industry, which is the primary function of capital markets. Through capital increases and issues, the funds provided to companies amounted to TL 140 billion in 2017. Similar to the practices in overseas stock exchanges, Borsa İstanbul enabled start-up companies to be quoted on the exchange for companies that qualify in terms of size for public offering on the BIST Stars. This will grant opportunity to companies above a certain scale that seek to expand their operations. We are anticipating this new arrangement to trigger increased activity in the public offering market next year. The amount of public offerings expected to take place in 2018 will be much higher. On the other hand, leveraged trading (forex) transactions made a hot topic for us at the onset of the year. As known, leveraged trading is, in fact, a product aimed at professional clients who know the risk involved. However, it has not been possible to keep small individual investors, who are not familiar with the product, from engaging in these transactions and suffering significant losses. In 2017, restrictions were introduced in this field with respect to the size of leverage and size of investors, as well. Distinguished Members, After we took office in 2014 when our Association of Capital Market Intermediary Institutions of Turkey (“TSPAKB”) acquired a new membership structure with the inclusion of asset management companies and investment trusts as per the amended Capital Market Law and was thus transformed into the Turkish Capital Markets Association, we set up Professional Committees under the new Association organization to ensure effective involvement of all member categories in management processes. During our term of office, we carried out our activities with a stronger representation as the Committees adopted their own decisions about topics in their respective domains, which were then submitted to our Board of Directors. Our Association has always been extending support to innovative products and services to drive the sector. Turkey Electronic Fund Trading (TEFAS) Platform that entered our lives in 2015 allowed investors to trade in all the funds available in our country through the institutions with which they maintain their accounts. In order to support this new initiative In 2017, our capital markets saw some of the most important developments in relation to increasing savings. 15 TCMA 2017 Annual Report